UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 25, 2000
(July 11, 2000)
IEXALT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 00-09322 75-1667097
(STATE OF INCORPORATION) (COMMISSION FILE NUMBER) (IRS EMPLOYER
IDENTIFICATION NO.)
4301 WINDFERN
HOUSTON, TEXAS 77041
(ADDRESS OF REGISTRANT"S PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE)
(281) 600-4000
(REGISTRANT"S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 11, 2000, iExalt, Inc., a Nevada corporation (the "Company"),
completed the acquisition of all issued and outstanding membership interests of
PremierCare, LLC, a Delaware limited liability company ("Premier"). Premier
provides management services for partial hospitalization geriatric mental health
programs to hospitals nationwide, currently managing programs in six states. Its
service provides turnkey management, including administrators, nurses,
counselors, other therapy personnel, and physicians. The Premier acquisition
resulted in the creation of the Company's Health Services Division.
As consideration for the acquisition, the Company issued a total of
540,000 common shares to the indirect owners of Premier. These indirect owners
are also entitled to receive up to an additional 560,000 of the Company's common
shares, provided certain contingencies are met. Of the total contingent shares,
60,000 shares are issuable on collection of a specific accounts receivable
within six months of the closing, and 250,000 contingent shares are issuable
upon each of the first and second anniversary date of the closing date based on
Premier achieving certain earnings levels during those 12 month periods. In
addition, the Company agreed to repay notes and advances in the amount of
$677,609 which had been guaranteed by certain officers and indirect owners of
Premier. The amount of the consideration given in exchange for all of the issued
and outstanding membership interests of Premier was based on arms-length
negotiation among the parties.
The Company also granted "piggyback" registration rights with respect to
an aggregate of 100,000 iExalt common shares issued in the acquisition. If the
Company fails to register such shares for resale within 120 days after the
closing date, the former indirect owners of Premier have the right, for a period
of 60 days after the expiration of the 120-day period, to put the shares to the
Company for a cash price per share equal to the average closing price of a share
of iExalt common stock during such 120-day period, but in no event less than
$1.50 or greater than $2.28 per share. The Company is negotiating an extension
of the time to file a registration statement before the right to put shares to
the Company becomes effective.
In connection with the acquisition, Premier entered into three-year
employment agreements with Charles H. Caperton, Clinton Tees and Jay Bridges to
serve as its Chief Operating Officer, Director of Reimbursement and Regional
Director, respectively. Donald W. Sapaugh, a director, President and a
shareholder of the Company, will continue as Chief Executive Officer of Premier
under his existing Premier employment agreement until a replacement agreement is
executed.
Mr. Donald W. Sapaugh, a director, President and 8.2 % shareholder of the
Company, is also the President and Chief Executive Officer of Premier and was a
22.8 % indirect owner of Premier. Mr. Sapaugh abstained from the discussions and
approval of the transaction by the Company's Board of Directors.
-2-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The appropriate financial statements are filed herewith as Annex A
(b) PRO FORMA FINANCIAL INFORMATION.
The appropriate pro forma financial information relating to the
acquisition is filed herewith as Annex B.
(c) EXHIBITS.
EXHIBIT NO. DESCRIPTION
----------- -----------
2.1 (1) Agreement and Plan of Reorganization,
dated June 28, 2000, among iExalt, Inc.
and its Merger Subsidiaries and
PremierCare, LLC and its Direct and
Indirect Members (exhibits omitted).
2.2 (1) Agreement and Plan of Merger, dated
June 28, 2000, among iExalt, Inc.,
PCII Combination Corp., and PremierCare
Investors, Inc.
2.3 (1) Agreement and Plan of Merger, dated
June 28, 2000, among iExalt, Inc.,
PBH Combination Corp., and Premier
Behavioral Healthcare, Inc.
4.1 (1) Registration Rights Agreement, dated
June 28, 2000.
99.1 (1) Press release issued by the Company
relating to the acquisition of
PremierCare Investors, Inc. and
Premier Behavioral Healthcare, Inc..
(1) Previously filed as an exhibit to the Company's current
report on Form 8-K filed with the Securities and
Exchange Commission on July 26, 2000 and incorporated
herein by reference.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
DATE: September 25, 2000. iExalt, Inc.
By: /s/ JAMES W. CARROLL
James W. Carroll
VICE PRESIDENT AND
CHIEF ACCOUNTING OFFICER
-4-
<PAGE>
ANNEX A
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
PremierCare, LLC
Houston, Texas
We have audited the accompanying balance sheets of PREMIERCARE, LLC as of
December 31, 1999 and 1998, and the related statements of operations, changes in
members' equity and cash flows for the year ended December 31, 1999, and the
period February 20, 1998 (date of inception), through December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PREMIERCARE, LLC as of December
31, 1999 and 1998, and the results of its operations and its cash flows for the
year ended December 31, 1999, and the period February 20, 1998 (date of
inception), through December 31, 1998, in conformity with generally accepted
accounting principles.
/s/ BAIRD, KURTZ & DOBSON
Baird, Kurtz & Dobson
Bowling Green, Kentucky
July 31, 2000
-1-
<PAGE>
PREMIERCARE, LLC
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
----------- ---------------------------
2000 1999 1998
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash ............................................... $ 8,369 $ 4,176 $ 6,842
Accounts receivable, less allowance for doubtful
accounts; 2000 - $66,142, 1999 - $66,000,
1998 - $0 ........................................ 600,283 544,821 358,665
Receivable from members ............................. 50,000 -- --
Prepaid expenses and other current assets .......... 17,986 47,108 31,762
----------- ----------- -----------
Total Current Assets ....................... 676,638 596,105 397,269
----------- ----------- -----------
PROPERTY AND EQUIPMENT, AT COST
Office equipment ................................... 11,343 11,343 8,663
Vehicles ........................................... 226,573 146,133 124,953
Furniture and fixtures ............................. 6,497 6,497 5,826
----------- ----------- -----------
244,413 163,973 139,442
Less accumulated depreciation ...................... 54,856 35,180 17,531
----------- ----------- -----------
189,557 128,793 121,911
----------- ----------- -----------
OTHER ASSETS
Excess of cost over fair value of net assets
acquired, net of accumulated amortization
of $82,237, $64,615, and $29,370 ................. $ 1,312,623 $ 1,188,948 $ 1,018,474
=========== =========== ===========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Bank overdraft ..................................... $-- $ 19,887 $--
Notes payable to bank .............................. 499,550 499,550 592,550
Current maturities of long-term debt ............... 42,620 32,481 32,263
Accounts payable ................................... 81,085 117,456 124,566
Payable to members ................................. 178,059 308,000 --
Accrued expenses ................................... 10,649 48,604 7,194
Other .............................................. 1,480 21,164 14,145
----------- ----------- -----------
Total Current Liabilities .................. 813,443 1,047,142 770,718
----------- ----------- -----------
LONG-TERM DEBT ......................................... 95,947 52,132 55,182
----------- ----------- -----------
MEMBERS' EQUITY
Unallocated capital ................................ 747,872 505,700 505,700
Undistributed deficit .............................. (344,639) (416,026) (313,126)
----------- ----------- -----------
403,233 89,674 192,574
----------- ----------- -----------
$ 1,312,623 $ 1,188,948 $ 1,018,474
=========== =========== ===========
</TABLE>
See Notes to Financial Statements
-2-
<PAGE>
PREMIERCARE, LLC
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED),
YEAR ENDED DECEMBER 31, 1999, AND PERIOD
FEBRUARY 20, 1998 (DATE OF INCEPTION), THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
--------------------------- ---------------------------
2000 1999 1999 1998
----------- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
MANAGEMENT FEE REVENUE ............... $ 1,793,345 $ 1,427,455 $ 3,273,564 $ 1,821,307
----------- ----------- ----------- -----------
OPERATING EXPENSES
Salaries, related taxes and leased
employee expenses .............. 1,142,984 957,025 1,945,868 1,355,550
Physician fees ................... 176,230 119,278 203,943 151,399
Contract labor ................... 47,697 50,085 158,721 70,348
Consulting fees .................. 33,680 58,615 110,938 56,317
Travel and transportation ........ 56,694 98,636 171,092 87,164
Insurance ........................ 14,377 12,183 143,256 28,384
Provision for doubtful accounts .. -- -- 66,142 --
Other expenses ................... 163,135 190,492 450,094 300,679
Depreciation and amortization .... 37,298 30,322 60,083 46,901
----------- ----------- ----------- -----------
1,672,095 1,516,636 3,310,137 2,096,742
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS ........ 121,250 (89,181) (36,573) (275,435)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest income .................. -- -- -- 1,025
Interest expense ................. (49,864) (28,983) (66,327) (38,716)
----------- ----------- ----------- -----------
(49,864) (28,983) (66,327) (37,691)
----------- ----------- ----------- -----------
NET INCOME (LOSS) .................... $ 71,387 $ (118,164) $ (102,900) $ (313,126)
=========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
-3-
<PAGE>
PREMIERCARE, LLC
STATEMENTS OF CHANGES IN MEMBERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED),
YEAR ENDED DECEMBER 31, 1999, AND PERIOD FEBRUARY 20, 1998
(DATE OF INCEPTION), THROUGH DECEMBER 31, 1998
UNALLOCATED UNDISTRIBUTED
CAPITAL DEFICIT TOTAL
--------- --------- ---------
ISSUANCE OF MEMBERS' EQUITY
UPON FORMATION ...................... $ 505,700 $-- $ 505,700
NET LOSS .............................. -- (313,126) (313,126)
--------- --------- ---------
BALANCE, DECEMBER 31, 1998 ............ 505,700 (313,126) 192,574
NET LOSS .............................. -- (102,900) (102,900)
--------- --------- ---------
BALANCE, DECEMBER 31, 1999 ............ 505,700 (416,026) 89,674
CONTRIBUTIONS TO MEMBERS' EQUITY ...... 242,172 -- 242,172
NET INCOME ............................ -- 71,387 71,386
--------- --------- ---------
BALANCE, JUNE 30, 2000 (UNAUDITED) .... $ 747,872 $(344,639) $ 403,233
========= ========= =========
See Notes to Financial Statements.
-4-
<PAGE>
PREMIERCARE, LLC
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED),
YEAR ENDED DECEMBER 31, 1999, AND PERIOD FEBRUARY 20, 1998
(DATE OF INCEPTION), THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
----------------------- -----------------------
2000 1999 1999 1998
--------- --------- --------- ---------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income (loss) ................................. $ 71,387 $(118,164) $(102,900) $(313,126)
Items not requiring (providing) cash:
Depreciation and amortization ................... 37,298 30,322 60,083 46,901
(Gain) loss on sale of property and equipment ... -- -- 7,718 (1,608)
Changes in:
Accounts receivable ............................. (55,462) (34,824) (186,156) (78,632)
Prepaid expenses and other current assets ....... 29,122 9,796 4,541 (22,591)
Accounts payable and accrued expenses ........... (113,897) 19,180 34,300 (31,367)
--------- --------- --------- ---------
Net cash used in operating activities ..... (31,552) (93,690) (182,414) (400,423)
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment ................ (80,440) (23,845) (58,604) (95,887)
Acquisition of Premier Behavioral Healthcare, Inc.,
(net of cash acquired) .......................... -- -- -- (446,640)
Proceeds from sale of property and equipment ...... -- -- 19,165 10,792
--------- --------- --------- ---------
Net cash used in investing activities ..... (80,440) (23,845) (39,439) (531,735)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt .......... 73,572 24,032 89,154 115,503
Principal payments on debt ........................ (19,618) (10,931) (84,967) (39,053)
Due to acquiree stockholder ....................... -- -- -- (30,000)
Members' capital contributions .................... -- -- -- 500,000
Net borrowings (payments) under line-of-credit
Agreement ....................................... -- -- (93,000) 392,550
Net advances from members ......................... (129,941) 103,000 308,000 --
Contribution to members equity, net of receivable
from members .................................... 192,172 -- -- --
Net cash provided by financing activities . 116,185 116,101 219,187 939,000
--------- --------- --------- ---------
INCREASE (DECREASE) IN CASH ........................... 4,193 (1,434) (2,666) 6,842
CASH, BEGINNING OF PERIOD ............................. 4,176 6,842 6,842 --
--------- --------- --------- ---------
CASH, END OF PERIOD ................................... $ 8,369 $ 5,408 $ 4,176 $ 6,842
========= ========= ========= =========
</TABLE>
See Notes to Financial Statements
-5-
<PAGE>
PREMIERCARE, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999 AND
DECEMBER 31, 1999 AND 1998
(Data as of and for the six months ended June 30, 2000 and 1999
is unaudited and is shown in brackets [ ])
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
PremierCare, LLC (Company) was formed February 20, 1998. The Company
immediately exchanged a portion of its ownership for the net assets of Premier
Behavioral Healthcare, Inc. The Company's revenues are predominately earned from
the implementation and management of geriatric psychological health clinics for
hospitals and other health facilities. During 1999 and 1998, the Company had
managed facilities in Texas, Illinois, Tennessee, Oklahoma and Utah. The Company
provides services upon written contract.
USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
PROPERTY AND EQUIPMENT
Property and equipment are depreciated over the estimated useful life of each
asset. Annual depreciation is primarily computed using the straight-line method.
GOODWILL
The excess of purchase price over the fair value of Premier Behavioral
Healthcare, Inc. at acquisition date is being amortized on a straight-line basis
over 15 years.
INCOME TAXES
The Company's members have elected to have the Company's income taxed as a
partnership under provisions of the Internal Revenue Code; therefore, taxable
income or loss is reported to the individual members for inclusion in their
respective tax returns. No provision for federal and state income taxes is
included in these statements.
6
<PAGE>
PREMIERCARE, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999 AND
DECEMBER 31, 1999 AND 1998
(Data as of and for the six months ended June 30, 2000 and 1999
is unaudited and is shown in brackets [ ])
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
[UNAUDITED INTERIM FINANCIAL INFORMATION]
---------------------------------------
[The interim financial statements as of and for the six months ended June 30,
2000 and 1999, are unaudited. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of the Company's management,
the unaudited interim financial statements contain all adjustments (consisting
of normal recurring adjustments and adjustments for contributions to members
equity that occurred just prior to the merger discussed in Note 7) considered
necessary for a fair presentation. The results of operations for the interim
periods are not necessarily indicative of the results for the entire fiscal
year.]
NOTE 2: NOTES PAYABLE TO BANK
JUNE 30, DECEMBER 31,
-------- -----------------------
2000 1999 1998
-------- -------- --------
(unaudited)
Bank One, N.A. (A) ................ $499,550 $499,550 $499,550
Deposit Guaranty National ......... -- -- 93,000
-------- -------- --------
$499,550 $499,550 $592,550
======== ======== ========
(A) Represents balance outstanding under a $500,000 line-of-credit agreement
which matures July 16, 2000; interest is due quarterly at prime (8.50% at
December 31, 1999); secured by corporate assets and the personal guarantees
of Company members.
This note was repaid in full subsequent to year end with proceeds from the
merger described in Note 7.
7
<PAGE>
PREMIERCARE, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999 AND
DECEMBER 31, 1999 AND 1998
(Data as of and for the six months ended June 30, 2000 and 1999
is unaudited and is shown in brackets [ ])
NOTE 3: LONG-TERM DEBT
JUNE 30, DECEMBER 31,
-------- -----------------------
2000 1999 1998
-------- -------- --------
(unaudited)
GMAC (A) .......................... $ 8,580 $ 13,939 $ 23,851
Ford Motor Credit (B) ............. 14,970 19,866 28,721
Ford Motor Credit (C) ............. 22,719 24,883 --
Ford Motor Credit (D) ............. 22,343 25,925 --
Ford Motor Credit (E) ............. 24,641 -- --
Ford Motor Credit (F) ............. 22,201 -- --
Nations Bank (G) .................. 23,113 -- --
Ford Motor Credit ................. -- -- 7,398
GMAC .............................. -- -- 27,475
-------- -------- --------
138,567 84,613 87,445
Less current maturities ........... 42,619 32,481 32,263
-------- -------- --------
$ 95,948 $ 52,132 $ 55,182
======== ======== ========
Aggregate annual maturities of long-term debt at December 31, 1999, are:
2000 $ 32,481
2001 25,199
2002 12,872
2003 8,761
2004 5,300
--------
$ 84,613
(A) Matures March 2001; payable $996 monthly including interest at 10.50%;
secured by vehicle.
(B) Matures December 2001; payable $844 monthly including interest at 1.90%;
secured by vehicle.
(C) Matures November 2004; payable $499 monthly including interest at 6.90%;
secured by vehicle.
(D) Matures May 2003; payable $676 monthly including interest at 3.90%; secured
by vehicle.
(E) [Matures December 2004; payable $557 monthly including interest at 8.99%;
secured by vehicle.]
(F) [Matures March 2005; payable $511 monthly including interest at 14.25%;
secured by vehicle.]
(G) [Matures March 2005; payable $538 monthly including interest at 10.00%;
secured by vehicle.]
8
<PAGE>
PREMIERCARE, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999 AND
DECEMBER 31, 1999 AND 1998
(Data as of and for the six months ended June 30, 2000 and 1999
is unaudited and is shown in brackets [ ])
NOTE 4: RELATED PARTY TRANSACTIONS
The Company engaged in several related party transactions stemming from
consulting agreements with some of the Company's officers. The Company
contracted with these individuals for services in the areas of management,
accounting, strategic planning and Company development and operations. Amounts
recognized for these services paid to related parties totaled $99,725 and
$271,000 for 1999 and 1998, respectively, and are included in consulting
expense, leased employee expense and accounting expense. Of these amounts,
$33,553 and $38,000 are included in accounts payable at December 31, 1999 and
1998, respectively.
During September and November 1999, the Company borrowed approximately
$320,000 from certain members and officers. No formal agreements have been
drafted detailing the repayment of these notes.
[During January and February 2000, the Company borrowed an additional $80,000
from these members of which $50,000 was repaid in June 2000 (See Note 7).]
NOTE 5: BUSINESS ACQUISITION
On February 20, 1998, the Company acquired the net assets of Premier
Behavioral Healthcare, Inc. The acquisition has been accounted for as a purchase
by recording the assets and liabilities of the acquiree at their estimated fair
values at the acquisition date.
Summarized financial information of the purchase details include the
acquisition of approximately $428,000 in assets, primarily comprised of cash,
accounts receivable and equipment, and the assumption of approximately $418,000
of debt for $500,000.
NOTE 6: SIGNIFICANT ESTIMATES AND CONCENTRATIONS
Generally accepted accounting principles require disclosure of certain
significant estimates and current vulnerabilities due to certain concentrations.
Those matters include the following:
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Included in accounts receivable at December 31, 1999, is $354,000 due from
one customer. As of the date of this report, the Company had collected
approximately $73,000 of this receivable. The Company recorded an allowance
related to this receivable of $66,000 at December 31, 1999, which management
believes to be adequate based on information currently available. However, the
amount
9
<PAGE>
PREMIERCARE, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999 AND
DECEMBER 31, 1999 AND 1998
(Data as of and for the six months ended June 30, 2000 and 1999
is unaudited and is shown in brackets [ ])
NOTE 6: SIGNIFICANT ESTIMATES AND CONCENTRATIONS (CONTINUED)
ultimately collected from this customer could differ materially in the near term
from the carrying amount reflected in these financial statements.
[As of June 30, 2000, the amount in accounts receivable due from this customer
totaled $326,000.]
AGREEMENTS
In February 1999, the Company entered into an agreement with Advanced
Behavioral Care, Inc. for management services. This agreement was terminated in
December 1999, and all operations associated with this contract were dissolved.
Under the termination agreement, the Company paid approximately $43,000 for
unpaid management fees and agreed to provide additional payments in the future
based on collections from a specific facility. An amount has been included in
accrued expenses for the estimated payments that could result from this
agreement. Actual results could differ materially from those estimated.
NOTE 7: SUBSEQUENT EVENTS
MERGER
The Company signed an agreement dated June 28, 2000, to merge with iExalt,
Inc. Under the terms of this agreement, the Company's members exchanged all
membership units to iExalt for 540,000 shares of iExalt, Inc. common stock. The
Company's members could receive an additional 560,000 shares of iExalt, Inc.
common stock based on operating results of the Company for periods after the
date of merger and the ultimate collection of the receivable described in Note
6.
[At the closing of the merger on July 11, 2000, certain members were required to
release the Company and assume from the Company liabilities totaling $192,172
($159,941 of amounts advanced to the Company by these members and $32,231 of
accounts payable and accrued liabilities). In addition, the members were to
repay to the Company $50,000 for advance payments made to these members during
June 2000. The unaudited financial statements as of June 30, 2000 include
contributions to members' equity of $242,172 for these transactions. ]
[As part of the merger, iExalt, Inc. agreed to provide funds totaling $677,609
on the date of closing. These proceeds were used to repay $499,550 of notes
payable to bank and $178,059 of the remaining advances from members.]
10
<PAGE>
PREMIERCARE, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999 AND
DECEMBER 31, 1999 AND 1998
(Data as of and for the six months ended June 30, 2000 and 1999
is unaudited and is shown in brackets [ ])
NOTE 7: SUBSEQUENT EVENTS (CONTINUED)
OUTPATIENT PROSPECTIVE PAYMENT SYSTEMS
On April 7, 2000, the Health Care Financing Administration issued the final
rule related to Medicare program prospective payment systems for hospital
outpatient services. Under the final rule, which becomes effective August 1,
2000, hospital outpatient reimbursement will transition from a cost-based
reimbursement system to an ambulatory payment classification (fee schedule)
system. Under this system, services related to partial hospitalization will be
reimbursed at approximately $202 per patient day. These charges could change the
way hospitals contract for their services with the Company.
NOTE 8: ADDITIONAL CASH FLOW INFORMATION
ADDITIONAL CASH PAYMENT INFORMATION
2000 1999 1998
-------- -------- --------
(unaudited)
Interest paid $ 24,855 $ 66,376 $ 33,290
NONCASH INVESTING AND FINANCING ACTIVITIES
The net assets of Premier Behavioral Healthcare, Inc. acquired in 1998 as
described in Note 5 included the following:
Cash ........................................... $ 85,825
Accounts receivable ............................ 280,033
Other assets ................................... 9,171
Property and equipment ......................... 52,738
--------
427,767
Less liabilities assumed ....................... 418,267
--------
Net assets acquired ............................ $ 9,500
========
11
<PAGE>
PREMIERCARE, LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999 AND
DECEMBER 31, 1999 AND 1998
(Data as of and for the six months ended June 30, 2000 and 1999
is unaudited and is shown in brackets [ ])
NOTE 9: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods were used to estimate the fair value of financial
instruments.
NOTES PAYABLE AND LONG-TERM DEBT
Fair value is estimated based on the borrowing rates currently available
to the Company for bank loans with similar terms and maturities.
At December 31, 1999, fair value equals carrying value.
12
<PAGE>
ANNEX B
The unaudited pro forma information is presented based upon the Company's
fiscal year end of August, 31, which is different than PremierCare, LLC's
calendar year end. The Company has included PremierCare's accounting information
for the comparable periods of the Company as well as all material adjustments
considered necessary by management for presentation in accordance with generally
accepted accounting principles.
The unaudited pro forma balance sheet reflects the acquisition by the
Company of PremierCare, LLC on July 11, 2000 as if it had occurred on May 31,
2000, the most recent quarterly filing date by the Company. The unaudited pro
forma statements of operations are for the year ended August 31, 1999 and for
the nine months ended May 31, 2000, and reflect the following acquisitions as if
they had occurred on September 1, 1998: PremierCare, LLC (July, 2000), First
Choice Marketing, Inc. (December, 1999), Premiere Speakers Bureau, Inc.
(December, 1999), Solutions Global, Inc. (November, 1999), Wordcross
Enterprises, Inc. (October, 1999), and NavPress Software (July, 1999). With the
exception of the acquisition of PremierCare, LLC, the pro forma adjustments
relating to the acquisitions listed above are shown under the heading of "Prior
Acquisitions". The unadjusted statement of operations for the Company for the
year ended August 31, 1999 reflects the results of operations for the accounting
acquiror in the reverse merger that was effective September 1, 1999 as described
in the Form 8-K/A filed with the Securities and Exchange Commission on November
15, 1999.
Pro forma adjustments primarily reflect the acquisition purchases and
associated goodwill and the resulting amortization of goodwill.
The pro forma financial data do not purport to represent what the
Company's combined financial position or results of operations would actually
have been if such transactions in fact had occurred on these dates and are not
necessarily representative of the Company's combined financial position or
results of operations for any future period. No attempt has been made to
estimate the corporate selling, general and administrative expense that would
have been necessary in the pro forma periods in order to have acquired and
operated these companies from the beginning of the respective periods. Since the
acquired entities were not under common control or management prior to their
acquisitions by the Company, historical combined results may not be comparable
to, or indicative of, future performance. The unaudited pro forma combined
financial statements should be read in conjunction with the historical
consolidated financial statements and notes thereto included in the company's
most recent interim report filed on Form 10-QSB.
1
<PAGE>
IEXALT, INC.
UNAUDITED PRO FORMA BALANCE SHEET
MAY 31, 2000
<TABLE>
<CAPTION>
IEXALT
AND PREMIER PRO FORMA PRO FORMA
SUBSIDIARIES CARE ADJUSTMENTS TOTAL
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Current assets .............. $1,930,001 $ 730,346 $ (677,609) $1,982,738
Property & equipment, net ... 676,087 192,864 -- 868,954
Goodwill, net ............... 3,897,979 449,365 385,764 4,789,154
Other assets ................ 316,089 -- (62,935) 253,154
---------- ---------- ---------- ----------
TOTAL ASSETS ................ $6,820,156 $1,372,575 $ (354,780) $7,837,951
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Current liabilities ......... $1,227,188 $ 877,144 $ (677,609) $1,426,723
Long-term liabilities ....... -- 98,865 -- 98,865
Shareholders' equity ........ 5,592,968 396,566 322,829 6,369,063
---------- ---------- ---------- ----------
TOTAL LIABILITIES &
EQUITY ...................... $6,820,156 $1,372,575 $ (354,780) $7,837,951
========== ========== ========== ==========
</TABLE>
2
<PAGE>
IEXALT, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
IEXALT
AND PRIOR PRO FORMA
SUBSIDIARIES ACQUISITIONS ADJUSTMENTS SUBTOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES .......................... $ 180,933 $ 2,577,644 $ -- $ 2,758,577
EXPENSES .......................... 516,796 2,657,475 112,570 3,286,841
------------ ------------ ------------ ------------
NET INCOME ........................ $ (335,863) $ (79,831) $ (112,570) $ (528,264)
============ ============ ============ ============
EARNINGS/(LOSS) PER SHARE ......... (0.02)
============
PROFORMA WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING ............ 20,904,166
============
PREMIER PRO FORMA PRO FORMA
SUBTOTAL CARE ADJUSTMENTS TOTAL
------------ ------------ ------------ ------------
REVENUES .......................... $ 2,758,577 $ 2,688,826 $ -- $ 5,447,403
EXPENSES .......................... 3,286,841 2,923,952 20,878 6,231,671
------------ ------------ ------------ ------------
NET INCOME ........................ $ (528,264) $ (235,126) $ (20,878) $ (784,268)
============ ============ ============ ============
EARNINGS/(LOSS) PER SHARE ......... (0.03)
============
PROFORMA WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING ............ 25,369,056
============
</TABLE>
3
<PAGE>
IEXALT, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MAY 31, 2000
<TABLE>
<CAPTION>
IEXALT
AND PRIOR PRO FORMA
SUBSIDIARIES ACQUISITIONS ADJUSTMENTS SUBTOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES ....................... $ 2,517,926 $ 354,730 $ -- $ 2,872,656
EXPENSES ....................... 4,649,160 491,162 33,172 5,173,494
------------ ------------ ------------ ------------
NET INCOME ..................... $ (2,131,234) $ (136,432) $ (33,172) $ (2,300,838)
============ ============ ============ ============
EARNINGS/(LOSS) PER SHARE ...... (0.08)
============
PROFORMA WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING .......... 25,578,882
============
PREMIER PRO FORMA PRO FORMA
SUBTOTAL CARE ADJUSTMENTS TOTAL
------------ ------------ ------------ ------------
REVENUES .......................... $ 2,872,656 $ 2,652,203 $-- $ 5,524,859
EXPENSES .......................... 5,173,494 2,616,099 15,658 7,805,251
------------ ------------ ------------ ------------
NET INCOME ........................ $ (2,300,838) $ 36,104 $ (15,658) (2,280,392)
============ ============ ============ ============
EARNINGS/(LOSS) PER SHARE ......... (0.09)
============
PROFORMA WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 26,160,882
============
</TABLE>
4
